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By Gunter Deuber[1] and Marcus How[2]

The US-Ukraine raw minerals agreement was a diplomatic success for the Zelensky administration – arguably the best possible outcome in the current circumstances. The agreement is in the very early stages of implementation and is highly unlikely to become fully effective until a sustainable peace agreement is in place between Russia and Ukraine. It could serve as a blueprint for future bilateral resource-for-reconstruction deals, while other countries may follow suit in formalising their support for Ukraine through similar frameworks.

Context

In February 2025, following the fiery public showdown between US President Donald Trump and his Ukrainian counterpart, Volodymyr Zelensky, the future of US military and financial support for Ukraine appeared gloomy. Just two months later, the Zelensky administration succeeded in turning things around and achieving an accord that is compatible with its geopolitical interests, concluding a landmark Mineral Resources Agreement (MRA) with the Trump administration. The first steps towards ratification and implementation then followed in April.

This was a considerable achievement. Back in October 2024, the Zelensky administration had first mooted the prospect of commercialising aid by offering exclusive Western access to Ukraine’s raw mineral deposits. This was a strategy designed to pre-empt transatlantic fatigue over the cost of support by capitalising on the growing geopolitical competition for critical minerals.

Following his inauguration in January, President Trump seized on Kyiv’s idea and briefly took ownership of it, with his administration outlining a proposal regarded as ‘economic colonialism’. The demands floated by the Trump administration included the repayment of some USD 350-500bn in military aid, as well as the US being granted the rights to take over the Zaporizhzhia nuclear power plant.

The Zelensky administration risked the wrath of Trump by rejecting these onerous demands and by persisting in negotiating terms that were more mutually equitable. The end result provides a basis for the commercialisation of US support to Ukraine and is in line with the Trump administration’s position that aid should be regarded as investment, with clear economic benefits for US strategic interests. At the same time, the Zelensky administration secured full recognition of ‘Russia’s full-scale invasion of Ukraine’ and the desirability of a ‘free, sovereign and secure Ukraine’.

It is our assessment that the MRA is balanced and has the potential to support Ukraine’s interests in the long term. However, there are concerns over whether the MRA will actually be implemented. These will be discussed in this article.

Key points of the MRA

The basis of the MRA is the creation of a United States-Ukraine Reconstruction Investment Fund (RIF), which will be jointly managed by the US International Development Finance Corporation (DFC) and Ukraine’s Public-Private Partnership Agency on an equal partnership basis. A six-member Performance Committee will be established to this end.

As well as hydrocarbons, the MRA covers over 50 minerals and includes deposits, infrastructure and future revenue. The resources involved are generally owned by the Ukrainian state and include relevant territorial waters.

The key terms and conditions are:[3]

• Ukraine is to retain complete ownership of its resources and infrastructure.
• Ukraine will contribute 50% of revenue from the exploitation of new mineral, oil and gas projects to the RIF, with neither partner permitted to sell or transfer shares without mutual consent.
• Current projects are exempt from having to contribute to the fund, e.g. the revenues of Naftogaz and Ukrnafta will continue to be linked to the general budget.
• The US may offtake future mineral resources on competitive terms.
• Sanctioned and/or hostile actors will be barred from participating.
• Any future US military assistance to Ukraine will be counted as a capital contribution to the RIF, with profit rights being granted. This will already allow Ukraine to claim short-term aid, such as Patriot air defence missiles, to bolster its dwindling stocks.
• Ukraine will not reimburse the US for past military aid: there is no retroactivity or debt obligations.
• The MRA affirms a ‘long-term strategic alignment’ between the US and Ukraine, but does not include any security guarantees; however, the RIF will invest the proceeds of resource extraction in Ukraine’s reconstruction and security.

Changes or disputes will be addressed jointly and consensually. Should EU accession obligations or other unforeseen circumstances necessitate any change to the MRA, both sides commit to good-faith adjustments. The agreement is rooted in trust and strategic coordination.

Practical implications

There are five variables that will be key to the MRA going forward:

1. Security

The MRA does not explicitly state that a peace settlement between Ukraine and Russia is a prerequisite for its implementation. Theoretically, the RIF can – and will – begin its activities as soon as possible. Yet the viability of the MRA on a larger scale will hinge on ensuring stable investment conditions, which will necessarily involve the neutralisation of hybrid warfare and war risks.

There is no way around this: not only are sizeable lithium deposits close to the front line itself, but if the Russian military continues its bombardment of Ukrainian energy and transport infrastructure, then launching any greenfield project will be highly challenging, as well as too costly to insure.

Therefore, a peace agreement that is sustainable and credible is implicitly a prerequisite for the RIF to become effective. Such an agreement must include security guarantees for Ukraine, but the Trump administration has been at pains to avoid any such commitment. The furthest the MRA goes is to support Ukraine’s goal of achieving security guarantees, while stating vaguely that ‘participants will seek to identify any necessary steps to protect mutual investments’. At the very least, private security companies and paramilitaries may play a role in securing projects.

The Trump administration argues that the MRA will in itself be an implicit security guarantee, because the US will have a direct strategic stake in Ukraine’s development. Furthermore, as US investors participate in projects, they will most likely deploy professionals whom the Russian military would have no interest in targeting – or at least that is the assumption. Such reasoning is very unlikely to provide comfort to investors.

At present, a peace agreement between Ukraine and Russia remains a remote prospect. Neither side has any interest in acceding to the demands of the other, which are regarded – by both sides – as too onerous. Russia is preparing for a summer offensive, during which it hopes to build on its incremental military successes; meanwhile, Ukraine is using innovative tactics to inflict heavy damage on Russia’s strategic military assets.

1.      Time

Security notwithstanding, the MRA is a framework predicated on long-term factors. It is not a short-term commercial play, and nor is it entirely mercenary. Indeed, its provisions stipulate that all profits generated over the first 10 years must be reinvested in Ukraine.

Exploiting untapped strategic mineral resources is both time and resource intensive even in a stable economy with established mining sectors and good infrastructure – let alone in Ukraine. That country’s raw mineral sector is still in its infancy: the geological data cited are based on Soviet-era mapping conducted up to half a century ago, the estimates of which were based on physical availability, rather than on economic viability. The deposits will require further exploration before extraction can even commence.

All this will take place in an environment where the energy and logistical infrastructure has been devastated and must be rebuilt; and at least half of the notional deposits of manganese and rare earths lie in Russian-occupied territory.[4] The issuing of licences for projects is slow: only 20 were issued between 2012 and 2020 – 0.57% of the total number of existing licences.[5] As such, exploitation of Ukraine’s minerals is estimated to require 10-20 years before real benefits are delivered, according to industry experts.

1. Financing

According to industry estimates, individual projects and mines typically require at least USD 2-3bn in upfront investment before they reach operational status. Yet in the case of Ukraine, these projects will also need to be accompanied by the reconstruction of energy and transport infrastructure. Indeed, Ukraine is currently operating at approximately 30% of its pre-war electricity capacity.

The RIF will play a key role in facilitating this. Theoretically, it will be possible for the RIF to finance extraction and reconstruction projects, including possibly through borrowing on international capital markets or from US-based investors with US guarantees attached. The MRA also contains a provision by which future US military aid is to be considered a capital contribution to the RIF, which will function as a form of credit.

There are also some reassurances for private investors under the MRA. It provides for free convertibility of the USD and the hryvnia (UAH) – in effect, a soft commitment to a flexible exchange rate system that maintains some leeway for limited and temporary capital controls to safeguard macro-financial stability.

Nonetheless, the extent to which the RIF will initially be backed with state guarantees and capital remains unclear. If the Trump administration is unwilling to commit to significant guarantees, the RIF will have one hand tied behind its back in terms of mobilising private investment. That will deprive Ukraine of the expertise and technology needed to advance projects, thereby creating a spiral of downward confidence.

1. Transparency

The MRA includes multiple provisions that stipulate expectations surrounding the transparency of the RIF and the projects that will operate under its remit. This reflects an implicit acknowledgement of the corruption risks in Ukraine, which are high and will likely keep on rising so long as active warfare continues.

There are various ways in which the MRA will counter and manage these risks directly. Certain payment flows and custodian functions are to be conducted with the involvement of foreign banks and financial institutions, and therefore will not be subject to purely Ukrainian control and operational authority. Sanctioned individuals and entities will be barred from participation in the RIF.

Furthermore, its governance structures will extend beyond the evenly split top-level board of the RIF. Investment and administrative committees will have a 3:2 US majority; the audit committee will be split evenly; while Ukraine wields a majority on the new projects committee. Ukrainian (and US) voting rights can be suspended if terms are breached.

There is a trade-off here: the international accountability provided for by the MRA may serve to undermine the equal partnership between the US and Ukraine. This dynamic could worsen over time, as the MRA stipulates that future US military assistance will be considered a capital contribution to the RIF, effectively increasing US influence.

Meanwhile, to meet the transparency standards outlined by the MRA, reform of the management of Ukraine’s relevant state-owned enterprises (SOEs) is likely to be necessary. This process began after 2014, but progress has been inconsistent. SOEs under the State Property Fund and the Ministry of Energy still face political interference, opaque procurement and poor financials. Much of the mining sector remains in state hands, with firms lacking capital and technical capacity. Even major players like Ukrnafta and UkrGasVydobuvannya have only partially adopted governance reforms, and many still operate without independent supervisory boards.

As such, even if investors are able to avoid corruption, the ability of Ukrainian SOEs to deliver will be limited by institutional legacies.

1. Political

The MRA may represent a major diplomatic triumph for the Zelensky administration, but for now it is little more than a piece of paper wielded by the elephant in the room: Trump himself. The president is mercurial and unpredictable, striking deals that he later reneges on or otherwise revises – such as the 2020 US-Mexico-Canada Agreement or the 2025 US-UK Economic Prosperity Deal.

Indeed, both prior to and since the signing of the MRA, Trump has lurched between positions which include qualified support for Ukraine and rapprochement with Russia. His administration has explored the prospect of economic cooperation with Russia, which would necessarily involve the easing of some sanctions. Russian President Vladimir Putin even mooted the possibility of supplying critical minerals to the US, including from within Russian-occupied Ukrainian territories, and welcomed the participation of US investors in developing such deposits.

Alternatively, there is a chance that the Trump administration could tactically exploit opportunities to amend the MRA to its greater advantage, especially if Ukraine is perceived to be in a position of weakness. Thus, it is plausible that Trump might renege on or revise the MRA, or otherwise enter into other arrangements that undermine its viability.

Yet the political risks are not only confined to the US side. There are significant misgivings in Ukraine about the MRA, with both nationalists and actors quietly amenable to Russian interests posing a potential challenge to its long-term prospects, should they gain power. This would not be unprecedented: in the 2000s, the Putin regime abrogated many energy ventures, such as production-sharing agreements, formally agreed with US and other foreign investors in the previous decade.

Legal arguments are already emerging. They include the claim that the US exploited the duress that Ukraine is under to pressure it into an agreement that is an act of economic coercion, thereby expressly violating Article 3 of the 1994 Budapest Memorandum.[6] This could be reinforced by the US claiming greater influence over the RIF over time, as it contributes more military aid to Ukraine. Regardless of the merits of these arguments, they illustrate the MRA’s vulnerability to challenge both internationally and domestically.

Conclusion

It is our assessment that the MRA represents a tactical success for Ukraine in diplomatic terms, especially given the ambivalence of the Trump administration to its situation. Yet it is unclear whether it will solidify into strategic progress. Security and political risks remain major impediments to effective implementation of the MRA. Other lingering uncertainties include the fact that the MRA itself contains neither a firm dispute resolution mechanism nor an express statement of governing law.

On the other hand, if the US (and the DFC as an institution in itself) develops a genuine self-interest in the comprehensive implementation of the MRA, there is substantial upside potential for Ukraine, which would gain access to cutting-edge technology and expertise. The US is home to major international mining and exploration technology companies, as well as relevant machinery manufacturers. Several US companies are among the top 10 companies globally in this sector. In addition, the MRA could be opened up to other countries or to companies from other mining countries (such as Canada and Australia), with which US companies could otherwise form partnerships.

Beyond this, there are wider geopolitical implications arising from the MRA.

First, it is the first of its kind, reflecting US aims to secure strategic resources amid rising geopolitical competition. Thus, it might serve as a template for future bilateral deals, whether between the US and other countries or between Ukraine and its Western backers. There are already indications that this is the case. In February, the Democratic Republic of Congo (DRC) approached the US with an offer of access to its vast strategic resources mirroring the Ukrainian proposal, amid the rapid advance of Rwanda-backed rebels in its eastern regions. This energy-for-security deal might be agreed in the near future, although it is a different beast from the MRA, owing to the fact that the rebel threat is far more manageable than the Russian military.

Second, with the MRA the Zelensky administration has enacted a decisive shift against China, acceding to implicit clauses that bar hostile actors from engagement with the RIF. This implies that China will not be included in minerals-related reconstruction and investment efforts in Ukraine – a development that aligns with the US goal of countering China’s systemic influence around raw materials. It also reflects Kyiv’s frustration over Beijing’s failure (or unwillingness) to broker a diplomatic solution. The window for Beijing to serve as a mediator in resolving the Ukraine conflict is thus closing.

Overall, the MRA may serve as a guiding mechanism to promote transparent, responsible and forward-looking long-term (direct) investment in critical sectors of the Ukrainian economy and thus support Ukraine’s recovery strategy, while cohering with Kyiv’s geopolitical priorities.

 

Notes:

[1] Managing Director, Chief Economist, Head of Research at RBI.

[2] Head of Analysis, VE Insight.

[3] https://www.sipotra.it/wp-content/uploads/2025/03/BILATERAL-AGREEMENT-ESTABLISHING-TERMS-AND-CONDITIONS-FOR-A-RECONSTRUCTION-INVESTMENT-FUND.pdf

[4] https://www.bbc.com/news/articles/c20le8jn282o

[5] https://www.reuters.com/world/europe/us-ukraine-may-wait-decade-or-more-see-revenue-minerals-deal-2025-05-01/

[6] https://www.geopoliticalmonitor.com/the-us-ukraine-critical-minerals-deal-breaches-the-budapest-memorandum/